Oyo Rooms eyeing expansion, plans Oyo Cafe

OYO Rooms is piloting a food technology venture and an on-demand housekeeping service as it looks to offer its customers a better experience.Aditi Shrivastava | ET Bureau | November 17, 2015, 08:43 IST

FILE PHOTO: OYO Rooms is piloting a food technology venture and an on-demand housekeeping service as it looks to offer its customers a better experience.BENGALURU: Budget hotels aggregator Oyo Rooms is piloting a food technology venture and an on-demand housekeeping service as it looks to offer its customers a better experience while creating a sustainable and standardized long-term brand.

With Oyo Cafe, the company will aggregate its listed hotels' kitchens to prepare food, which it will sell under its own brand.

"As in any food business, we noticed that our partner hotels' kitchen have excess inventory," said Maninder Gulati, head of strategy and corporate development at Oyo.

"So, the idea is, if we can utilise that and use food tech platforms like Zomato or Swiggy to distribute that food then that's a revenue generation potential for our partner."

Gulati said Oyo Care, the on-demand housekeeping services venture, is a larger experiment. "That is an on-demand cleaning service. Our area managers can facilitate cleanup for a room as and when a customer needs it," he said.

Gulati, a former venture capital investor, joined Oyo in October. He was earlier a principal at Lightspeed Venture Partners India, a venture fund which is an investor in Oyo Rooms.

Oyo has been roping in unbranded, small hotels with attractive minimum guarantee deals, which ensures them revenues. This inventory of hotel rooms is then being sold at discounted prices to get new customers hooked on to the branded budget stay, which have standard amenities.

Gulati said over the last two years, the Gurgaon-based company has seen people from all walks of life check in to Oyo rooms. "From angel investors who would want to cut down on travel time and, therefore, pick the nearest OYO, to students who gather on a Saturday night to watch a match together, we have seen all sorts of use cases for Oyo," he said.

Since raising $100 million in August in a round led by SoftBank, Oyo has aggressively expanded its network to 30,000 rooms in over 3,000 properties across 130 Indian cities and towns from 12,000 rooms in 1,200 properties in 73 cities. Oyo had earlier said that it is targeting over 50,000 rooms in 5,000 properties by the end of 2015.

Experts say since Oyo is discounting most of its properties to incentivise customers, adding new services becomes critical for its success in the long term. On the other hand, the company is burning cash to block inventory in its partner hotels.

"We want to contribute to 80% of business that these hotels get, therefore, we take the significant number of rooms in each property," Gulati said.

Online travel aggregator Make-Mytrip has come up with its own brand of budget rooms with the launch of Value+. In September, Goibibo launched its own platform, GoStays, to facilitate booking budget accommodation.